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External Liberalization, Economic Performance and Social Policy$
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Lance Taylor

Print publication date: 2001

Print ISBN-13: 9780195145465

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780195145465.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 12 December 2019

Mexico: Trade and Financial Liberalization With Volatile Capital Inflows: Macroeconomic Consequences and Social Impacts During the 1990s

Mexico: Trade and Financial Liberalization With Volatile Capital Inflows: Macroeconomic Consequences and Social Impacts During the 1990s

Chapter:
(p.217) 7 Mexico: Trade and Financial Liberalization With Volatile Capital Inflows: Macroeconomic Consequences and Social Impacts During the 1990s
Source:
External Liberalization, Economic Performance and Social Policy
Author(s):

Jaime Ros (Contributor Webpage)

Nora Lustig

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195145465.003.0007

By the mid‐1980s, the Mexican economy was still suffering the consequences of the 1982 debt crisis, and these were compounded by the difficulties created by the collapse of oil prices in early 1986, but three years later, a turnaround had taken place. Following a successful heterodox stabilization program, which began in late 1987, a sharp reduction in domestic and external public debt, facilitated by a Brady agreement in mid‐1989, and financed with large privatization revenues, Mexico returned to the international capital markets, and its economy finally appeared to be on its way to recover economic growth and price stability after almost a decade of economic decline and high inflation. When the North American Free Trade Agreement (NAFTA) was approved in 1993, optimistic expectations became even more rampant; this chapter addresses the question of why the country that was supposed to enter a period of sustained prosperity, and one of the most successful emerging markets, found itself in the mid‐1990s immersed in the worst economic crisis in the last seventy years. In the first section, the balance of payments liberalization measures that preceded the episode of massive capital inflows of the early 1990s are reviewed, and its macroeconomic consequences discussed. The second section then examines how these macroeconomic developments were reflected in the labor market, the third section turns to the evolution of income distribution and poverty since the mid‐1980s, and a concluding section draws lessons from the Mexican experience, and discusses the prospects of the economy after the crisis.

Keywords:   Brady agreement, capital inflow, economic crisis, economic recovery, income distribution, labor market, oil prices, poverty, privatization

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